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Thursday, August 20, 2015

Is Frugality the New Living Large?

The news that rap mogul Fifty Cent filed for
bankruptcy not long ago surely raised a few eyebrows. After all, he seemed the
very epitome of living large – but then, living large is something of a fickle
illusion. Recent history is littered with examples of entertainers who rocketed
to fame and fortune, only to come crashing to earth ignominiously, stunned when
the seemingly endless good life abruptly fizzled out: Fifty’s fellow bankrupted
celebs include MC Hammer, TLC, and Toni Braxton (twice), to name just three
well-known examples.

Athletes too can suffer the same financial fate:
boxer Mike Tyson, basketball’s Scottie Pippen, baseball’s Jack Clark, and many more. While players are active the money faucet seems like it will never stop
flowing, but in a few years it can dry up – and for shortsighted athletes, who
often have no other job skills, their savings dry up just as quickly. In 2008,
the NBA Players’ Association claimed that 60 percent of pro basketball players go broke within five years of
retirement. That is a sobering statistic.

Or it should be, anyway. But athletes in
their prime are living in the eternal now of youth, and feeling invincible.
Even when they do have one eye toward the future, most have no conception of
how to manage the bucks they rake in.

Vin Baker, for example, spent 13 years in the
NBA, playing in four All-Star Games. But alcoholism and a string of bad financial
choices such as a failed restaurant combined to wipe out nearly $100 million in earnings.

“When you make choices and decisions and
think that it will never end, and then you get into spending and addiction and
more spending, it’s a definite formula for losing,” Baker said. Asked what advice he would give other players, he said, “I’d want guys
to not take the money for granted. It can be here today and gone tomorrow… As
quickly as that contract can be signed, there are a hundred things that can
also ruin it.”

When Jets cornerback Antonio
Cromartie first came into the NFL, he had an addiction also – to spending
money. “I was out of control,” he said. Cromartie blew all the guaranteed money from his rookie contract –
about $5 million – in his first two years in the league, on luxuries like nine
cars, two homes, jewelry, and hangers-on.

Cromartie now shares his hard-earned
financial experience with teammates: “I want to help others learn from what I
did wrong,” he said. “I tell the young guys, ‘Don't spend any money the first
year and a half of your career. You don't know what will happen after that.”

Baltimore Ravens guard John Urschel reportedly lives on $25,000 a year and even had a roommate last year to
keep expenses down. Urschel made $564,000 in salary and bonuses as a rookie in
2014. His deal is worth $2.3 million, but only the $144,000 signing bonus was
guaranteed. If he gets cut, the team owes him nothing, so Urschel is keenly
aware that he needs to make the money last.

Toward that end, he drives a used 2013 Nissan
Versa which he bought for $9,000. His modest ride looks rather hilarious in this tweeted photo of it between the massive, expensive
vehicles of a pair of fellow players, but I don’t think anyone will dare
ridicule the 308 lb. Urschel about it.

Another example is Detroit Lions wide receiver Ryan
Broyles, who was drafted in 2012. His contract was worth over $3.6
million, more than $1.4 million of which was guaranteed. But Broyles had
seen other athletes blow through their stash, and he was determined to avoid
that. He met with a financial adviser who urged Broyles to figure out his
means, set a budget, live within it, and invest the rest.

Broyles says that he and his wife have lived on about $60,000 a year throughout
his career so far. Everything else has gone toward ensuring that his post-football
monetary future is set. He drives a Ford Focus rental car during training
camp and he still has his 2005 Chevrolet Trailblazer from college. “Whatever
comes, it's just a blessing,” he says. “But I got the mindset of a businessman
off the field, I'll tell you that.”

Broyles now coaches others on finances.
Earlier this year he traveled to Washington, D.C. to speak to students about
financial planning. He is working with VISA and the NFL on promoting
financial security and planning.

Players like these are becoming the new role
models for up-and-coming athletic superstars. HBO has even centered a new show,
Ballers, on a
former-athlete-turned-investment-counselor (played by Dwayne Johnson) who tries to knock financial sense into athlete clients before their dream jobs
turn into nightmare unemployment.

My friend Eric
Matthews, a wealth advisor
and associate vice president at the Beverly Hills investment firm LourdMurray,
represents entertainers and athletes. I asked him if he is seeing a trend of
budget-consciousness among his clients, or if the temptation to live large is
still too great.

“I think the lure will always be there,” he
answered:

I have a rookie wide receiver I am working
with now. He got back from rookie camp and already wants to own a big tricked-out
SUV in addition to the sports car he wants to buy. He's living on the minimum
and isn’t even guaranteed a spot on the roster yet. He wasn't talking like this
before rookie camp. Now that he's back I saw the twinkle in his eye for stuff.
I have to remind him that he didn't work this hard in high school and college
to get to this level in his career to blow it all on cars and trucks. We have
to think bigger picture. It is starting to resonate deeper the more time I spend
with him, but it takes time and education. There is a whole world for these
guys to discover still.

But Matthews does see a greater financial
awareness, especially among younger clients:

Millennials and the iGeneration want more
transparency. Many want to know where others went wrong. I always tell them
that we need to focus on what we can control, and the hard part that a client
can control is their behavior. A lack of money discipline is what really hurts
guys.

The good news is that many young players are
wising up to the foolish and illusory nature of living large and embracing the
advantages and stability of frugality. As Eric Matthews told me, “What these
young players are realizing is that they don’t need to be the next example of a
broke athlete.”

About Me

Mark is the editor of TruthRevolt and a Shillman Journalism Fellow at the David Horowitz Freedom Center. He writes about culture and politics for Acculturated, FrontPage Magazine, The Federalist, The New Criterion, and elsewhere. He has made television appearances on CNN, Glenn Beck and elsewhere, as well as many radio and public appearances.
Mark has worked on numerous films including co-writing the award-winning documentary “Jihad in America: The Grand Deception.”
He is currently adapting a book for the big screen and writing one of his own for Templeton Press.